6 Features to Consider When Comparing Online Payroll Services

Online payroll services are not all created equal. Business owners may want to determine the features they need most before committing to a payroll company.
February 08, 2017

When you're researching online payroll services, where do you begin? 

You're probably looking for efficiency when it comes to costs and time savings. You may want the payroll service you choose to be nimble and let you easily manage your employee and benefits needs on a day-to-day basis. But are all online payroll services created equal?

I dug into some of the top providers and explored exactly what makes online payroll providers tick. I realized through examining these services that there are six areas you can use to focus your comparison:

  • taxes
  • features
  • benefits administration
  • customer service
  • industry-specific needs
  • cost

Let's dive in and explain each of these key comparison areas so you're armed with knowledge to help make a decision on an online payroll services provider that fits your company's specific needs.

1. Online payroll services handle taxes differently.

Filing payroll means dealing with payroll taxes. Depending on your company's needs, you may or may not want a payroll provider who handles your taxes for you.

If you plan on filing the necessary forms and making your state, local and employee payroll tax payments like Social Security, Medicare and unemployment yourself, fantastic. You probably won't need a payroll company that offers a tax guarantee.

What's a tax guarantee? With a tax guarantee, your online payroll provider is saying they'll be responsible for collecting your tax payments from each pay period. It would also file the necessary forms along with your payments for your federal and state payroll taxes. Additionally, if any problems arise, a tax guarantee means your payroll company will pay any fines and handle disputes on your behalf. 

Payroll can be an expense as well as a potential liability if it's not handled properly. As you compare online payroll services, look out for all the customer service tools each provider has in place.

When researching online payroll services, you may notice that some offer a tax guarantee and others don't. Check and see if the services you're considering align with your tax payment preferences. If you're relying on the payroll company to file and pay taxes on your company's behalf, you might be wise to choose one with a tax guarantee.

2. Features can vary among online payroll services.

When it comes to features, some online payroll companies are more nimble than others. Many offer a wide range of pay periods (monthly, semi-monthly, every two weeks, weekly, etc.) and others will limit you to basic options like monthly or semi-monthly. Some even allow you to choose the dates of your payroll, while others default to the 1st and the 15th.

Many payroll companies also offer features like employee on-boarding, time tracking for hourly employees and integration with your preferred bookkeeping software. I suggest knowing what you need before you begin searching, and perhaps more importantly, knowing what features you don't need so you're not getting into a solution that's more expensive and more robust than your company needs.

3. Benefits administration shouldn't be overlooked.

From healthcare to employee retirement plans, you're trying to take the best care possible of your employees. Payroll services can vary in their capacity to handle all the ways you can give your employees a better life.

Consider making a list of all the benefits you currently offer your employees: health insurance, company-sponsored retirement plans, workers compensation, commuting benefits, etc. You can have this list handy as you compare providers to ensure the payroll company you prefer can meet your benefits administration demands. When in doubt, you can pick up the phone to speak to a human being and ask questions. Which brings me to the next very important point.

4. Customer service isn't a fringe benefit.

Payroll can be an expense as well as a potential liability if it's not handled properly. As you compare online payroll services, look out for all the customer service tools each provider has in place. Some offer online support only. Others offer email, chat and phone support. 

Don't be afraid to search for reviews on a particular online payroll company. After all, fellow businesspeople just might be one of the best barometers for how a company runs its business.

5. Pay attention to any industry-specific needs your business has.

If you're in an industry with specific payroll demands, such as the ability to report tipped income, you'll  have to limit your search to the online providers that can meet your needs. There are multiple companies out there that offer your tipped employees the ability to account for this crucial component of their income.

6. Cost has multiple variables.

If your search for online payroll services is based strictly on cost, you may want to rethink your search criteria. 

Some online payroll providers have a base price, which is the price you might find in a search result. However, you may be paying more each month. Other online payroll companies have a base price plus a per-person charge each month. As well, many offer multiple pricing tiers with varying features. This is why I put cost last in the list, because knowing all of the points of comparison listed above may affect the tier you ultimately choose from your preferred provider. If you're confused about costs, you can call the provider and lay out your company's exact scenario and have them give you an exact quote.

For example, if a payroll company has a base price of $39 per month and a $6 per employee charge, your payroll for 10 employees will be $99 per month with benefits administration. Now, you might find a company that has a base charge of $79, includes 10 employees a month but doesn't offer benefits administration. This is why it's important to know the features you need before beginning to compare costs between providers. You can save yourself an avoidable headache.

Now, you have the tools to help compare online payroll companies side by side. This can help you find your next payroll provider. Keep in mind that the more complex your payroll becomes and the more employees your company has, the more you can expect to pay each month. But it may be a small price to pay for the peace of mind in knowing your payroll, taxes and benefits administration are being handled properly and with care.

Read more articles on tax preparation.

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